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Signal v. Noise: Business

Our Most Recent Posts on Business

I don’t want to be a winner

David wrote this on 22 comments

Is there anything our society exalts more than The Winner? That fiery someone who crushes all competition to stand alone and victorious at the end. A genetic predisposition, I’m sure.

The paradigm of competition is so ingrained as the basic business narrative that we usually don’t even recognize it, much less question it. Well, of course there are winners and losers! What are you, a fucking communist?!

Actually, no. I’m a capitalist who doesn’t like direct competition. Is that an oxymoron? It shouldn’t be. In fact, it’s the profitable, justified motivation I smiled to see affirmed by Blue Ocean Strategy, the business book that explains this non-combative style with case studies like Cirque du Soleil.

I think that’s why I never really liked individual sports or games either. I remember how hard my heart would race playing 1-1 Quake, and how infinitely more shitty it felt losing than winning, and that even the latter wasn’t all that interesting!

Competition is the direct cultivation of stress and paranoia. Tapping fight-or-flight for game and gold. No thank you. Not for me, no siree!

The only competition I’ve come to love is the one against myself, and that’s not really a competition, now is it? The progress of betterment. Playing your part to the best of your abilities in a beautiful whole.

That’s the joy I take away from racing cars for endurance. It’s not so much being faster than the other cars, but striving to perfect your own contribution as part of a team. Pushing against the limits of perfect execution over the long term. 24 hours of testing your capability to avoid mistake and fatigue. Winning is almost incidental to that.

The same goes for making Basecamp the best software and the best company it can be. It’s not about taking out or choking existing or upcoming competition. It’s not about dominating a space to the exclusion of all others. I’m not sipping sour grapes or feeling bad when a competitor hits its stride. In fact, it’s so much more interesting when Basecamp is just one of many, different choices for people to make progress together.

The world is better off when its not being held in the palm of a few dominating winners.


David wrote this on 38 comments

About 12 years ago, I co-founded a startup called Basecamp: A simple project collaboration tool that helps people make progress together, sold on a monthly subscription.

It took a part of some people’s work life and made it a little better. A little nicer than trying to manage a project over email or by stringing together a bunch of separate chat, file sharing, and task systems. Along the way it made for a comfortable business to own for my partner and me, and a great place to work for our employees.

That’s it.

It didn’t disrupt anything. It didn’t add any new members to the three-comma club. It was never a unicorn. Even worse: There are still, after all these years, less than fifty people working at Basecamp. We don’t even have a San Francisco satellite office!

I know what you’re thinking, right? BOOOORING. Why am I even listening to this guy? Isn’t this supposed to be a conference for the winners of game startup? Like people who’ve either already taken hundreds of million in venture capital or at least are aspiring to? Who the hell in their right mind would waste more than a decade toiling away at a company that doesn’t even have a pretense of an ambition for Eating The World™.

Well, the reason I’m here is to remind you that maybe, just maybe, you too have a nagging, gagging sense that the current atmosphere of disrupt-o-mania isn’t the only air a startup can breathe. That perhaps this zeal for disruption is not only crowding out other motives for doing a startup, but also can be downright poisonous for everyone here and the rest of the world.


What would it take to prove me wrong?

David wrote this on 4 comments

Good intuition propels progress. Listening to your gut is faster than rigourously exploring all possible options. The more you can get away with leaning on intuition, the more things you can improve in the same amount of time. The best product makers have excellent intuition.

But exactly because intuition on a roll is so powerful, it also invokes a sense of invicibility: Hey, if I was right about the gut take the last twenty times, why wouldn’t I be right about this too?

“Success is a lousy teacher. It seduces smart people into thinking they can’t lose” — Bill Gates

That’s no reason to give up on intuition, but it is cause to consider a fallback strategy. The primary of which should be having answers to the following: What evidence would prove me wrong? Is my gut take falsifiable? Will I have the courage to admit being wrong, if the data proves it so?

Some times there’s simply no way to know before you act. That’s the providence of A/B testing. If the data isn’t there upfront, then let’s just try it and see what happens!

Other times the answers are indeed already there, we just don’t have the confidence to look. It’s so easy to fall in love with an idea that makes intuitive sense. The theory is just too satisfying to give up. We don’t even want to entertain the idea of being wrong, at least not yet.

The golden path is to give almost all intuitive ideas the benefit of the doubt, but then articulate that doubt as clearly as possible. The quicker you determine which ideas are duds, the quicker you can load the next batch.

The Scientist

Nathan Kontny
Nathan Kontny wrote this on 8 comments

Last week, Consumer Reports pulled their recommendation of Tesla's Model S, Elon Musk's electric car. Once touted as the best-performing car they ever tested, now it has a "worse-than-average" reliability rating. Actually this might not be that big of a blow to Tesla, yet. Typical Model S customers are folks who own two, three or more cars. The Model S is a novelty. If it doesn't work, they have something else to drive.

But Tesla is making a huge bet that their upcoming Model 3 will strike it big in the mainstream market with a price target of $35,000. That's a market where drivers often rely on a single car as their sole means of transport. One that would be less forgiving of reliability problems. If Tesla can't get it right now, can they satisfy an even more demanding crowd? Tesla's stock dropped 7%.

In 2004 at Burning Man, a yearly gathering in the Nevada desert, someone erected a 30 foot wooden pole with a dancing platform on top. Dozens of people failed to climb the pole. And then there's another who gives it his try. He doesn't look like someone who could climb it. And as he's trying, suspicions are confirmed. He's terrible and looks like he's about to fail. He hugs the pole the whole time as he squirms and inches his way up. With sheer determination he reaches the top of that platform. Who was he? Elon Musk.

That's one of many stories you can read in Elon Musk's recent biography from Ashlee Vance. And if you read some of these stories, like how he battled through getting fired from Paypal or survived a close-to-death case of malaria, you might come to the conclusion that it's his perseverance that will help him see Tesla out of this current predicament. But you'd be missing a key ingredient that makes Elon who he is.


Remove the stress, pick a deadline

David wrote this on 7 comments

October 20 was the internal deadline we picked for Basecamp 3 back in early Summer. It was computed by the highly scientific method of two-parts sussing, one-part calendar dart throwing, and the full awareness of its arbitrary nature.

The purpose of a self-imposed deadline is to sharpen the edge of your prioritization sword and stake a flag of coordination for the team. It’s not a hill to die on. It’s not a justification for weeks of death marching. It’s a voluntary constraint on scope.

Yes, deadlines are wonderful! They’re the tie-breaker on feature debates. They suck all the excess heat out of the prioritization joust: “Hey, I’d love to get your additional pet feature into the first release, but, you know: THE DEADLINE”.

The opposite of the deadline, the once much heralded When It’s Done, is the oppression of a blank canvas. Unless your system has fewer moving parts than you can count on two hands, objective perfection is impossible. It’s always a trade-off, but one that now needs to happen in the uncharted territory of a team-sized illusion of agreements.

Putting in a good day’s work relies on the knowledge that you just moved a little bit closer to the finish line. If the finish line is constantly moving and constantly in dispute, it’s impossible to reap that satisfaction. Which in turn leads to stress and misery.

Don’t let the self-imposed deadline kill you, let it free you.

Poaching is for animals, not employees

David wrote this on 11 comments

The language of hiring is broken. From the cog-like “human resources” to the scalp-trophy chase of “head-hunting”. Yuck. But no term gets me more riled up than “poaching”. It’s shockingly revealing: You’re an animal, our animal, and other hunters better keep their hands off our property.


Employees should go wherever they can get the best deal for themselves. I would! Better deal in the holistic sense of everything that’s involved with working for someone else: Most interesting and rewarding work, most freedom in living arrangements, autonomy/responsibility, and, yes, pay and benefits.

If you can only retain employees by fencing them in with non-competes, hiding them away from your about page, or blocking competitive deals from even reaching their attention, well, then you suck.

All your energy should be poured into making sure you have the better deal. That work aligns perfectly with having a better business in general, so it’s not like you’re taking a detour here.

If you’ve done all you can, if you sleep sound with a smile knowing you’re offering a great deal, then the sting of someone leaving should be manageable too. They found something that was better for them. Be happy! You helped someone get to a better place, and you’ll surely be able to find someone else to fill their shoes.

You can’t keep everyone forever, and you shouldn’t try. That’s called captivity. Some people will want to try something else regardless of how good your deal is. That’s natural, and fighting it is only going to make matters worse.

So stop nurturing your poaching fears with defensive moves and start putting in the work to make your deal better instead.

Don’t base your business on a paid app

David wrote this on 10 comments

The App and Play stores have turned out to be exceptionally poor places to run a software product business for most developers. They’re great distribution channels for service makers, like Facebook or Lyft or Basecamp, but they’re terrible places to try to make a living (or better) selling software products.

At a buck or few per app, how could it be otherwise? That type of pricing will work for Angry Birds and a handful of other games, but very poorly for most other types of software products. The scale you need, the sustained influx of new customers, well, it’s a place for mega stars, and people who think they can beat the odds at becoming just that.

That’s why I’ve been discouraging people from chasing dreams of a successful, sustainable software product business by pursuing paid apps. Far better be your odds at succeeding with a service where the app is simply a gateway, not the destination.

Watching users of Tweetbot heckle the team for daring to charge $5 for a 8-month upgrade only reaffirms that belief. It’s a sad sight of entitlement, but at this point also entirely predictable.

Apple and Google both benefit from having apps be as cheap as possible. For Apple, that means people will buy an iPhone more readily when the cost to fill it with software is near nil. For Google, it means app makers have to shove ads into products to make them pay. Win-win-lose.

What’s good for platform makers is often not good for those who build upon it. That’s where the whole picking up pennies in front of a steamroller comes from. Yes, a few may be quick enough to pickup enough pennies to fill a jar, but for most, it’s not a wise trade of risk vs reward.

Forget the paid app.

Making money along the way

David wrote this on 7 comments

Remember the Flip camera? From its premiere in 2006 until the business was sold to Cisco in 2009, the little video recorder was killing it. Lavish praise, booming sales, flying high. And then cell phones got good enough at recording video, and that was the end of that.

If you disregard the acquisition proceeds, was Flip a terrible business? Well, that depends: Were they taking profits along the way?

There’s no natural law that states all products and services must endure forever and always. Some companies are glorious sprints, others are slugging marathons. Both can work, but the former is especially sensitive to making money along the way.

The problem is that everyone thinks they’re going to run a spectacular marathon in technology these days. There’s no amount too great to be invested in future growth, because the future is infinite, and you’d be a fool not to capture as much of that as you possibly can.

But what if the time allotted to your capture looks more like Flip? What if your product is going to have a great, booming run, but not for the next 30 years, just the next five?


Disruption is better when it's other people’s jobs

David wrote this on 14 comments

Many writers and publishers are freaking out after Apple opened Safari to ad blockers in iOS9. Ad blockers have been around for a long time, but the fear is that this is the move that will take the concept mainstream.

That fear appears well justified. The App Store’s charts have been dominated by ad blockers since the release of iOS9 last week. Currently, the #1 paid app is Crystal, an ad blocker, and so is #3, Purify. Clearly some pent up demand.

Another data point is the following poll from The Verge. It was setup with an almost satirically over-the-top slant, and yet readers pummeled them: